KARACHI: The government raised much less than the target through the auction of treasury bills (T-bills) on Wednesday while the cut-off yields on the papers were kept unchanged.

The State Bank said the government raised Rs85 billion which was lower than the target of Rs150bn.

The bids of Rs14bn for 12-month papers were rejected. The low amount offered for the one-year tenor indicates that banks were asking for higher returns.

However, the government accepted only Rs65.6bn out of Rs91.5bn offered for the three-month papers. Similarly, it accepted Rs20bn out of Rs62.9bn for the six-month T-bills.

The bidding trend remained same for the last over one year in the wake of declining interest rate and prevailing low main inflation as the banks kept investing the highest amount in the three-month T-bills.

The government has also changed its borrowing strategy and decided to borrow maximum through T-bills instead of Pakistan Investment Bonds which were costlier and long-term.

The share of banks’ investment in T-bills increased to 42.2pc as of Sept 30, 2015 from 38.4pc on June 30, 2015. In contrast, share in PIBs reduced from 54.9pc to 51.2pc during the same period.

In the last auction held on November 25, the government raised the highest amount of Rs122bn for three-month papers and Rs10bn was raised for six-month papers. However, the total borrowing was less than the target and no bids were accepted for 12-month T-bills.

Another report of the State Bank showed that the government borrowed Rs257bn for budgetary support during July-Nov period of this fiscal year compared to Rs145bn in the same period last year.

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